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ECB Calls Spain's Bluff... Or Does It? And Did Europe Just Check To The Fed?
While most of the early action today was driven by a baseless rumor that the ECB would announce some magical recapitalization plan that would put everything back into its normal (by this we mean somehow sustainable) place, the alleged time when Draghi would make such an announcement came and went... and nothing. Instead, the ECB, using the FT as its mouthpiece, came out late in the day, however not with news that Europhiles wanted to hear. As a reminder, as part of the proposed Bankia nationalization scheme, Spain would inject Spanish debt into the insolvent entity, thereby allowing it to pledge the debt for ECB repo cash. Or so the thinking went. This was, in effect, Spain's bluff. The ECB has just called it.
A Spanish plan to recapitalise Bankia, the troubled lender, by indirectly tapping the European Central Bank for cash, was bluntly rejected as unacceptable by the ECB, European officials said.
News of the rejection came as Spain faces elevated borrowing costs in the bond markets, tries to persuade investors it can contain problems in a banking sector weighed down by €180bn of bad property loans and, on Tuesday, saw its central bank governor stand down early.
Instead, it seems that the ECB is a fan of the old fashioned type of capital raise: one involving equity, and cash, and none of this newfangled repo monetary ponziness. Of course, the only bank that did try a capital raise by way of a rights offering in 2012 was Italian UniCredit which plunged by nearly half in the days following the announcement as a market test would clearly indicate it was woefully undercapitalized and its equity may well be worthless. This, however, does not seem to bother the ECB:
The ECB told Madrid that a proper capital injection was needed for Bankia and its plans were in danger of breaching an EU ban on “monetary financing,” or central bank funding of governments, according to two European officials
ECB's calling of the Spanish bluff also explains the earlier news of Ordonez' premature evacuation from the Bank of Spain, which we noted:
News of the ECB’s hardline response emerged as the Bank of Spain announced that Miguel Angel Fernández Ordóñez, its governor, would step down at the end of next week, a month earlier than planned. Mr Fernández Ordóñez – known by his initials Mafo, who was appointed by Spain’s previous socialist government – has been subject to increasing attacks from politicians over his failure to prevent the country’s banking crisis.
In summary:
“This is like a game of poker now,” one government adviser said, “and I don’t think Spain is bluffing”.
Well, it is. Because its cards, as explained yesterday, are all merely collateral backed by zombie banks which carry their "assets" at idiotic valuations.
So yes - in the great game of monetary poker, the ECB just called Spain's bluff. Or maybe not. Because paradoxically this may all be simply a means to crash the market, as we have been cautioning since last week, when Citi, correctly, said that Crossover would cross over (pun intended) 1000 bps, before the central banks would get involved.
In other words: yes, it is a game of cards, but one which may well have Spain and the ECB on the same side of the table, and now both have checked to Ben Bernanke, who has 3 weeks to decide if the cost of bailing out Europe, and thus US banks, is worth the printing of another $1 trillion.
We can't wait to find out.
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Should I panic or something?
I guess we have to wait until morning futures tell us what to think.
futures only come in one color Dog, and thats green..... The plunge protection team is nothing if not dilligent.
Brian Sack has 30 days of voodoo mayhem left in him for sure.
http://www.zerohedge.com/news/brian-sack-out
I hate to say this but it looks like the Mayans really knew their shit about 5,000 year calendars.
... and they knew even more about 13,000 year galactic cycles.
Chew on that one for a while ...
barliman
Weren't the Olmecs the smart ones?
And is that chew, or choom? If you're talking about chewing on a Mayan, I'll need my bath salts first.
The Galactic Ferderation of light has some interesting insight http://www.youtube.com/watch?v=B7qFlyiOSq8
Haaaah! Never thought I'd see that posted by anyone here.
Trip out...duuuuuude.... but good stuff. I'd highly recommend all barnacled old farts here to check it out!!! Awesome stuff Dr. H.
Meanwhile, anyone who is a Motorcyclist/Enthusiast, do dive in below and tell me why?
ori
the-great-machinery-death-cult-wake-up
It's not going to be pretty, but I think we'll get through it together.
Indeed Michael.
How do you feel about Romney's slightly pre-mature announcement?
And Jeb Bush carefully considerign a potential VP spot.
Another Bush VP will be like a bad dream, recurring.
ori
Google: Countersteering and "steering dampers" in the context of motorcycles.
Thanks css, that was particulary in the Indian context, where the bikes are very much a 1960's design with pretty skin, fenders, seats, forward rake (all style no substance) et. al.
ori
Shroom.
Hey big ching asshoe, you should really know better than to say "the mayans really knew". So I won't junk you now, but don't be surprised when I ream you and your comments in the future.
Don't hurt him, big guy!
R U kiddin? I love The Big Ching-aso. He can take it and dole it back. Sharpens his skills, he's no dummy.
Why do we continue to have to bail out every insolvent Bank?
Tradition.
Because it's easy, you just turn on the press's and print another trillion in counterfiet fiat. It doesn't hurt the 1% just the 99% who have to pay for it and they can't be too pissed off about it cause they don't do anything about it.
So it's Uncle Benny to the rescue with another helicopter of QE cash!!!!
"and it's fried rice you plick"
WHAT??
Haven't you heard that THE MEDIA MESSIAH has saved MILLIONS of jobs, and spent LESS money than all previous Presidents?
MSNBC/NBC told me, so it just HAS to be the truth, right?
Just think of how many MORE jobs the Messiah Obama could save by Printing only a trillion dollars more!
That too shall pass.
But... but... but... 4 more years? ugh.
You'd think the people would wake up to this, but no.
http://www.bbc.co.uk/news/world-us-canada-18255192
Obamney just won the required delegates in RP's home state.
Oh, and more importantly, Kim Kardashinin has new boots.
Goodnight Irene!
"I guess we have to wait until morning futures tell us what to think."
If you'd prefer not to wait I'll tell you what to think and do.
Or maybe you could ask those in the second twin tower how it worked out for them, ... no you can't coz they're still waiting for the call.
Think for yourself but don't think you're infallible.
Think if the future of all human civilisation depended on me, what would I do, how would I be?
Did I do all that I could?
Don't Panic.
Central planners have this situation under control.
Muhahahahahahahahahahahahah ... Muhahahahahahahahahahahahaha!
I think you should "or something".
He's correct, they are trying to tell the US they have no viable plan and no money. The only people that could "help" is the US bailing out parts of Europe. Essentially it's another bluff but this time it's with the ECB and Spain against the US. Is the pain of an imploded EU and currency better than a bailout of another Trillion. I bet the bankers will get them to bail out the ECB to that amount. Because they are tied up with the EU countries to the tune of trillions.
Frankly, it's a damn good bluff, since it's an Election Year, and the Euros can clearly see that Obama has no hesitation whatsoever spending trillions in taxpayer money to save his 2012 arse.
You gonna bet one chip or two chips Ray?
Hat Tip!
4
THERE ARE FORUMS AND, FRANKLY, OTHER SITES FOR THIS STUFF. TAKE IT THERE.
ANY MORE OF THIS USELESS DRIVEL ABOUT 9/11/01 AND I'M GOING TO BEGIN DELETING THINGS.
Turd flake is in a DREAM WORLD! HAHAHAHA! Gettin' funnier by the post over there!
My instant reaction to the latest ECB pronouncement: zzzzzzzz. More blah-blah-blah, threatening tough talk, blah-blah-blah. Just fucking do something definitive already instead of talking us all to death.
Don't panic, change is possible.
How did a $774-million hole in the city’s operating budget become a $90-million surplus?
Toronto is expected to finish the year with $90-million to spare. Just a year ago, Mayor Rob Ford’s administration was issuing dire warnings about the need to cut costs in order to plug a $774-million funding shortfall in the city’s 2012 budget.
http://www.theglobeandmail.com/news/national/toronto/how-does-a-774-mill...
Even if Ben prints '$1 trillion', everyone knows it solves nothing and lasts maybe a few weeks....so then what?
"Everyone" except the 1/2 of the world population riding the choomwagon...
I resent that. There is nothing wrong with the choomwagon ... plenty of bright, energetic, thinking ppl on that train, Shiiit, I think I was the conductor once.
That 1/2 the population sleep walks thru life in an unthinking stupor is not in dispute. But pick another reason for why - 'cuz ur's don't fly.
One half of the population sleep walks thru life in an unthinking stupor, and the other half thinks it doesn't.
choomwagon?
I would *dream* for a world where, at any given time, half of the population was be-choomed.
We could then switch shifts.
That fucker is still stoned.
Then, next month we print $1.1tn thereby solving the problem once and for all.
So what we're banking on here is 1 QE, then another? Dare I ask.....'what then?'
Why do you ask questions you already answered yourself?
Just wonderin. So the magic formula is '2 more QE's'... ok got it.
Some get paid fortunes for code such as this:
while(1)
{
QE();
}
Please - Nobody tell Bernanke that the number one always evaluates to true. We'll keep it our little scientific secret.
while(1=1)
{
QE();
}
You can't assign 1 to an immediate left value!
dim one int
one = 1
while(one=1)
{
QE();
X=''
10 * loop
CALL QE(X)
PRINT X
IF bernank.pulls.head.out.of.ass = true THEN GOTO 20
GOTO 10
20 * exit
STOP
Dude, ...
hey, coal_miner's_cadaver!
do me: "pouring from the empty into the void"
must be endless, but without the goTo
any chance?
GOTO went out of style in 1980ies.
one....does not equal won
razorthin, it won't compile.
'\end_of_program' - ending bracket '}' expected
"while(1=1)
{
QE();
}"
QED?
A couple of asprin and pull the pillows over your head. That's typically what I do when I get a hangover.
Those are minor annoyances. Easily handled by hydration. IV is best.
Then in a few weeks he prints another billion...It's all Bullshit!
Billion?!!
That's so 2011.
What do you mean it solves nothing? It lets bank execs pocket $millions more and preserves their pensions and parachutes at our expense. Nes pas?
How does one say DefCon 2 in espanol?
DefCon Dos... There you go.
I don't always panic, but when I do, I prefer Dos DefCon....stay worried my friends.
dos def con carne
These Keynesians are doing a hell of a job.
Once bailed out they really taught those institutions a lesson - namely, that if you engage in risky behaviour, the taxpayer will pay you supersized bonuses!
They are doing a hell of a job financing massive government spending.
Yes, what an amazing coincidence.
How many bluffs is the ECB going to call, the Eurozone has 17 active members and 10 tits ...no offense meant to the female members of european zone.
I like central bankers. Especially if they have big tits.
most of them do
yuk.
And even worse the big tits weigh em down. Give me a nice plump B or C anyday.
i would like to see your avatar's tits, E_K!
i have found her h.0.t. since day1
Anna Chapman, my friend. Anna Chapman :)
ECB better watch itself. Telling a sovereign what it can and cant do is a easy way to get itself into trouble.
Dr. No
you have just discovered the secret...unlike with Ben Bernacke there is no one who can make the phone call to Draghi and say "print dammit'.
The Euro is a currency of NO SINGLE NATION. Thus it is immune to the abuse the dollar is subjected to constantly.
The Euro is not like the dollar.
You're presuming that to pull the strings one needs a bunch of cronies from one nation sitting in a room together, when a bunch of cronies from no nation sitting in a room together does just as well.
Meanwhile, gold takes a bath.....again.....and again......and
I can´t understand why either...there is something afoot....this is not right by a long shot...it stinks to high heaven...the game is rigged....and tons of metal are being shifted somewhere...
The interesting thing about today however, is that on previous occasions where the price has tumbled quickly (suspiciously quickly, and this is a suspiciously common occourance) towards the close - but today it rebounced. 1,557 -> 1,548, but it immediately retook 1,557. Looks like someone's little plan didn't work out as expected.
Fuck those colluding arseholes right up the...
Whatever man! God bless them for forcing down the price of metals. If not for those glorious central bankers, I wouldn't have been able to afford half the gold I have now. I just hope gold goes down vs the dollar once the Euro collapses. It will be short lived, but you can bet I will be stacking.
I agree. I have been working to utilize this event to bring more people into the PM world. You are right. When the event occurs I and everyone with me are moving in. A source I have (old silver trader) believes that silver could drop all the way to 16 - I am not so positive, my threshold is 20 and then we start buying in quantity. I believe if it touches 16, it will be very difficult to find any sellers. 16 would be a fake price for a disjointed market. It will not stay down long before it takes off though. It might only stay down a couple of days max, but more likely a couple of hours max.
It's going to be wicked fast.
The rope you are holding is gonna scalp your palms and burn you down to the bone when it does take off... and cut you in half on the way up.
I have seen charts on silver rise and fall 6 to 10 dollars in a few minutes sometimes. neck snapping fast buying and selling... whew.
Weeks of months of the doldrums before you round the cape horn in winter with the grey beards and all.
how come no one here made a big deal or even a post about this last week?
http://www.silverdoctors.com/were-500-million-ounces-of-paper-silver-just-dumped-on-the-comex-in-1-hour/
or this- http://www.silverdoctors.com/iran-activates-alternative-system-for-swift/
It's not a big deal.
Prices go down, stackers stack.
What else is new? Paper bad, metal good.
It's called deflation. Thats what happens when credit markets contract via bank runs and margin calls.
Yep, nobody has any money so ya take what you can get.
Go read Jesse...11K contracts in 10 minutes.
Still can get almost 56 oz of silver for 1 oz of gold.
Measuring against USD may not be the best long term strategy.
Actually for a day or two last year you only needed roughly 47 to gold.
Sell 50 silver, buy one gold... keep the other 50 you built up.
Start adding to your next gold buy.
Sometimes I am tempted to simply buy two or three gold coins and say fuck it to the mountain of silver.... however a birdie told me a story of 14 silver to one gold... if that happens again, conversion is gonna be SMOKING!
How is it possible that the European Union allows the weak states to enter the international money market and borrow the money they need without help – based on their own potentials? How is it possible that the “chain” of interests of euro can let its weak “links” exposed to outside pressures? How is it possible for a “herd” with common interests to let each “ship” defend itself against the wolves, without help, and its general security threatened? How is it possible for Greece, which represents a minor 3% of the Eurozone’s economy, to be allowed to threaten the other 97% of that economy, due to the latter’s weakness?
The European Union should be the one borrowing from the national banking system – thus dealing with profiteers itself based on its overall potential – not its weak “links” alone. The latter should be under the EU’s protection and constant monitoring. They should borrow from it at a subsequent time and if they became victims of profiteering, the problem should be kept in the bosom of the euro. Domestic profiteering should bring profits to Europe’s influentials, therefore bring profits in the euro area, and not threaten it.
From the Wall Street Crash of 1929 to the Global Financial Crisis of 2007
www.eamb-ydrohoos.blogspot.com/2010/02/ten-plagues-of-pharaoh.html
Authored by Panagiotis Traianou
None of this woulda happened had we one world gubamint like the UN Development Bank for Undernourished African Potentates and Assorted Investment Bankers.
AAAAARGGHH I WANA CLEAN DAT DIRT!
Only $1 Trillion? pfft. Small potatoes, they need to think big.
/sarc
$1 Trillion will just be the denomination on the face of the notes. They'll print thousands of 'em. Make sure to getcha some...
Be careful what you wish for ...
Old Europe does not think big.
New Europe has been stressing about debt issues for so long...
Maybe we absorb Europe into our United States and let it be that.
Print baby print baby 1 2 3 4
Print baby print baby 1 2 3
Print baby print baby 1 2
Print baby print baby 1
As simple as 1 -2 -3 : those lacking the ability to write are forced to print.
I think the game is to jsut baffle eveyone with as much BS as you can that you give up and jsut go full retardo into the stock markets. Seems to be working here in the US.
With all this begging from each and every insolvent european country whether it's for europonzibonds or direct monetary financing, i keep seeing the constant flash in every story i read: "socialist govt".
Ref: "The Road to Serfdom" by Friedrich Hayek - note the parallels of Italy's Monti, the French Hollande`aise solialist sause de`jour and Brussels' conjoining 'Van Rompuy'! Oh,... and let us not forget the stalwart Merkel of Germany - soon to be disposed ?
Hayek's book speaks of the rise of totalitarianism for the very obscure evolving reasons of socialism prescribed today regarding the EU/ USA? "Hayek thought government planning was dangerous [1930-1940's? Hitler & Mussolini et.el.]. He did not attempt to assess the merits of particular government funded social welfare regimes, many of which he believed were 'appropriate and beneficial', including subsidy for the aged and unemployment insurance. Rather, he attempted to show that there was a reciprocal relationship between growth of taxpayer-funded social programs and the diminution of personal liberty."
This quote is strikingly parallel to the USA and EU today? JMO
This time the printing will be more obvious and the continued sinning more apparent.
What does the Fed say when they have to explain to the American public that they will be bailing out a Spanish bank? This cannot end well.
The Fed will say, like it did every other time, that without its prescient intervention the world would have ended and people will go back to their everyday business. Don't forget that Americans believe that, out of 300,000,000 people, GW Bush and BH Obama are the best to lead them.
Well, justifiably so, for between em, they created or saved 678,933,411 1/2 jobs.
That was old last time it was trotted out. In addition, they are running out of smoke and mirrors.
"Don't forget that Americans believe that, out of 300,000,000 people, GW Bush and BH Obama are the best to lead them."
Oh Sa-NAP!!
Sheeit...
I recall some bosses that were damn good. And for every good boss there was a dozen bosses who should not be allowed to tell people what to do.
It doesn't matter how many times they throw this hot potato, everytime they do it just keeps getting hotter and hotter. No worries folks, it won't be long before these Zombie Bankers start eating each others faces...
Ouch. Too son, I think.
yeah, the Bankers still have their clothes on...
Eating each other's faces. Or indeed, faeces.
Aaand....futures go from green to red.
Only to be ramped up overnight as it always is. Oh they games they play.
You make it seem like newfangled repo monetary ponziness is a bad thing. Does ZH have any PhDs on staff to help us understand what happens when debt surpasses assets?
Assets are so 20th century.
Right. We gots iStuff and don't need no assetz.
Limit QEn
n??
QEEND .............. http://www.zerohedge.com/news/what-do-fx-traders-know-stock-momos-dont#comment-2461380
Coming soon to a global economy near you.
barliman
Always the optimitist ...
"... and now both have checked to Ben Bernanke, who has 3 weeks to decide if the cost of bailing out Europe, and thus US banks, is worth the printing of another $1 trillion."
Ben will check back to the other players. He's not playing to win THIS hand.
He is playing to win the tournament - which will be much easier with the small fry (EU/euro backed players) out of the game, Germany buying its way back in with the new DM, China's chances crippled by the collapse of the EU exports, the Asian markets crapping in their pants, and the global political classes begging,
"Help us, Obi Ben Bernanke. YOU are our only hope."
His play at that point will be well north of $ 1 trillion USD.
barliman
ALERT IN BANCO POPULAR_PASTOR
Santander is the one to watch very closely. It can trigger some change that will blow the shit out of Herman the Unelected.
Three two's beats a pair of two's
Hah!
I got five zeros!
You must play with the Central Bank deck of cards. None of mine have 5 two's.
This is becoming disgusting now..it used to be exciting...humorous...not now.....its a poker game with a bunch of cheaters...and each one has their own rigged deck of cards...and these are the "people" or institutions we are supposed to believe....and support...and they "work" for us...lol...its over....but now its who can steal the most the fastest...and they are...and the money comes from US....the little guy..and we can´t do anything about it...think about it...how do yu "save" a bank when they are not even telling you the truth...????? and why would you want to.....as a politician would you risk your name..your reputation on a Bank that is bullshitting you at every turn.....not me...just amazing watching this unfold...the lies..the theft...the politicians..economists...talking heads...the bankers....
The last time I did poker, got a straight flush and sunk the hundreds back into the table.
Poor to riches back to normal poor in a hour.
"Ordonez' premature evacuation"............
How old am I to be laughing at this, 12 ? ?
In the common vernacular 'premature evacuation' is known as 'shitting the bed'.
Check to Bernake? I think you mean pass the check to Bernanke. Will this be lubeless? inquiring taxpayers want to know.
Spain should probably start looking for some asteroids to mine.
After they build hi-speed rail lines connecting all major cities with zero budget overruns, 'cause that'll really rev up the economy -- being shovel-ready and all.
Railroads are faster than Aircraft these days.
Europe knows how to build and run em.
We have shit amtrack that has rusted in one overused corridor for decades.
What we can do is harness several cities into corridors at a time and boost the speed from crap 125 to 260 or so.
It will be a real alternative to driving, air travel.
What is truly awesome is when a 200 mph train wrecks, it is not the number of dead; but the actual surviving living.
REAL ESTATE PRICES; STILL IN THE MOON¡'¡¡¡¡SPAIN DOESNT RECOGNISE REAL ESTATE PRICES HAS TO PLUNGE ANOTHER 30-50%
Oops bad news from Europe, that must mean Obama is a great president, Bernanke a great Fed chairman, the US$ will rally and gold will be sold.
[quote]...and the money comes from US....the little guy...[/quote]
No ... its not coming from you.
YOU have been broke and spending more than you have for 30 years.
Look at the whole picture ...
Any money that you might have is due to a ponzi that you benefited from.
Not the USA..us as in we.....we will be paying the bankers higher interest rates...or have inflation take our wealth away....or total colapse....but even then the bankers win..they have private jets to take them to a secure local...with most of their goodies already stashed there...Me I live in Colombia....
"How is it possible for Greece, which represents a minor 3% of the Eurozone’s economy, to be allowed to threaten the other 97% of that economy, due to the latter’s weakness?"
Because the dopes in the ECB lent way too much money already to your crooked politicians and their cooked books?
Proving once again that fools and their money will be parted.
You could always take one of those nice spanking new German submarines and hold Hamburg hostage.
Gotta think outside the box on this one.
"6. Bernanke's EU Rescue: I look for one of the big two EU problem kids.. Spain or Italy.. to get into some very real trouble this year. As of this writing, Italy looks like the weaker of the two, but Spain has some very real issues and an ongoing Depression to begin with. I think the ECB and the EFSF will have to be given a quick assist from The Bernank as the situation looks as though it will get out of hand. Bernanke will purchase the bonds of an EU sovereign this year directly or through a 3rd party such as the EFSF. Republicans will use this to crucify both Obama and Bernanke"
http://themeanoldinvestor.blogspot.com/2011/12/predictions-for-2012-flames-of-war.html
I wholeheartedly agree. The game is up. But there will be a "flight to safety" - the biggest turd in the bowl is the US, after all. So if the Benanke doesn't start the prinitng presses it might actually look good for the US.....for a while.....
Alternatively, the EFSF will need to beefed up yet again... and no doubt Spain will be asked to contribute. Again.
http://www.efsf.europa.eu/about/index.htm
Gee, it's AAA, what could possibly go wrong?
So the ECB won't press the print button. No Problem. I expect Spain will announce a new method of funding the bailout of Bankia based on Keynesian Fantasy Economic Principles. I expect them to announce the immediate opening in front of Bankia of a paella and sangria food stand with all proceeds going to the bailout. If they get to 28 billion served then problem solved.
Better toss in a few of those 'guest worker' Croatian hookers in the vault to maximize return.
Croatian hookers will be unavailable as they are reserved for servicing the Bankia bankers as a bonus for their outstanding yearly performance.
I think the necessary "print" to save the system is so large that no-one wants to be the CB that pulls the trigger. No bazooka this time its going to need a neutron bomb.
That's why we need another coordinated fiat bonanza.
And we will all print (go down) togetherrrr.
The Euroeans have never wanted to pay their own bills. Every new fantasy bailout they have trotted out has required non EU money to fund it by buying billions of crappy bonds. Socialists ALWAYS want someone else to PAY!
The US must be socialist. They have been getting someone else to pay for the last 30 years.
They have been spending money that they don't have.